ABSTRACT

Socially responsible business, with a purpose beyond making profit, can have a positive social, economic and environmental impact by helping to improve working and surrounding conditions. This study was aimed at examining the impact of corporate social responsibility on the performance of quoted organizations in Nigeria. The specific objectives are to ascertain the effect of Donations and Sponsorships on the Return on Asset of quoted organizations in Nigeria, to evaluate the effect of Donations and Sponsorships on the Return on Equity of quoted organizations in Nigeria as well as to determine the effect of Donations and Sponsorships on the Earnings per share of quoted organizations in Nigeria. From the listed nine (9) sectors, the study used fifteen (15) out of the 157 listed firms on the Nigerian stock exchange. Data collected on corporate social responsibility (measured using Donations and Sponsorship) as well as on financial performance (measured using return on asset, return on equity and earnings per share) were analysed using descriptive statistics, correlation analysis and simple linear regression analysis. The result of the analysis reveal that while Corporate social responsibility (Donations and Sponsorship) has a significant impact on return on asset (ROA) as well as on return on equity (ROE) of quoted organizations in Nigeria, it has no significant impact on earnings per share (EPS) of quoted organizations in Nigeria. The study recommends that Nigerian listed organizations should step up their CSR programs and disclosures most especially employee, environment, community and consumer responsibilities in order to enhance their financial performance. Also, there is need for the Federal Government of Nigeria to regulate corporate social and environmental reporting through the relevant regulatory agencies (such as FRCN) since CSR is beneficial to the government, the listed companies and stakeholders. Government benefits by getting more corporate tax from increased profitability resulting from disclosure of CSR.

TABLE OF CONTENTS

CHAPTER 1 

INTRODUCTION

1.1  Background of the Study

Corporate Social Responsibility (CSR) is a business approach that views respect for ethics, people, communities and the environment, as an integral strategy that increases value added, and thus, improves the competitive position of a firm. It is a comprehensive set of policies, practices and programs that are integrated throughout business operations and decision- making processes. 

Dare (2014) noted that, there is a growing global trend towards both government mandated and voluntary corporate disclosure of information on the environmental, labor, human rights, and social impacts of business practices. The goal of this reporting grouped here under the rubric of Corporate Social Responsibility (CSR) reporting, is to generate new and better information on the performance of business organizations. This is aimed at supporting more informed decision-making by key stakeholders, and ultimately to create new incentives for business organizations to reduce adverse impacts of their activities.

Little (2016) maintained that corporate social responsibility initiatives can lead to innovation2s through the use of social, environmental, or sustainability drivers to create new products and services. Just as a person needs to be a good citizen, contributing to the welfare of the society, corporations need to be good citizens as well. Corporate Social Responsibility (CSR) is the concern shown by business organizations for the welfare of the society.

Over the past decade; a growing number of business organizations have recognized the business benefits of Corporate Socially Responsible (CSR) policies and practices. Their experiences are bolstered by a growing body of empirical studies that CSR has a positive impact on business economic performance and is not detrimental to shareholder value.

Majority of business organizations also have been encouraged to adopt or expand CSR efforts due to the result of pressures from customers, suppliers, employees, communities, investors, activist organizations and other stakeholders. As a result, CSR has grown dramatically in recent years, with businesses of all sizes and sectors developing innovative strategies. Most businesses have come to realize that CSR is good for business, since it increases productivity, contribute to competitiveness and creates a positive corporate image in the eyes of consumers, investors, employees and community at large.

By the same token, socially responsible business, with a purpose beyond making profit, can have a positive social, economic and environmental impact by helping to improve working and surrounding conditions. Corporate Social Responsibility could be viewed as a symbolic relationship that exists between a firm and all the stakeholders. Ramanathan (2019), stated that there exists a social contract between the organization and society. Jaggi and Zhao (2016), agreed with the social view when they argue that organization do not exist in a vacuum, but are part of society, which creates and supports them. They affirm that social environment is a part of the total environment in which business operates.

Many empirical studies have been carried out in order to examine the impact of corporate social responsibility on organizational performance of business organizations, especially in developed countries. Why little studies were carried out in developing countries, Nigeria inclusive. It is against this background that this research work tries to examine the role of corporate social responsibility on the performance of organizations.

1.2  Statement of the Problem

The increasing adoption of corporate social responsibility (CSR) in businesses (Source Watch, 2018; Sagar and Singla, 2013; Hoffman, 2017) has grown with its corresponding challenges, which may include ethical violations (Aluko et al., 2014; Lantos, 2018), economic dishonesty Amaechi (2016), commitment problem, gender complications, controversies and agitations (Marshall, 2017), profit-making problems and accountability mechanism weaknesses (Brennan, 2018).

In recent years there have been series of arguments, debates and controversies among businessmen, academics, government officials and the society in general on what should be the principal objectives of business organizations.

Over the years, managers have neglected the problems created by corporate firms to their host communities. These problems pose a lot of threat and sometimes make life difficult for these communities. The privilege giving to organization to operate in the society stems from the act that society believes that there is a mutual interdependency existing between them, that is, the organization and the society.

The relationship between organizations and their host community has become increasingly important. The decision made in an organization may influence community prosperity and also national and even internationally economic activity might be affected. An example of these problems is the on-going crisis in the Niger Delta region which has led to the destruction of lives and properties. There are accusations from the youths in these areas that companies misdirect their efforts and resources that they should have used to develop the community to bribe opinion leaders in order to overlook their responsibilities to the community, and these have caused a lot of acrimonies between the two parties, community and the firm.

These same problems can also be identified in other areas and in other communities across the country where large companies are located. This prompted the researcher with deep sense of burden to these communities to unraveled the need for these large firms to see the need in helping the society solve some of its problems, most especially those they help to create, and involve in philanthropic donations to the needs of these communities and provide the community with some social amenities. A lot of money is always committed to the corporate social responsibility of an organization without knowing its direct impact in their performance. According to Osuala (2017), the statement of research problem serves to elaborate upon the information implied in the title of the study. Hence in this research work, the researcher seeks to investigate the impact of corporate social responsibilities on the performance of some selected manufacturing company in Nigeria to its domain which can in tureen enhance the prospects of the business. Particularly because of the profit factor in business, a lot of organizations have not embraced corporate social responsibility as imperative but recent social developments have shown that this should not be so. Why this should not be so as the significance of the positive attitude of business organizations to corporate social responsibility is the bedrock of this study.

It is against the background that this study checks to investigate the role of corporate social responsibility on the performance of organizations in order to close the gap existing in the literature mentioned above.

1.3  Objectives of the Study

The main aim of this study is to examine the impact of corporate social responsibility on the performance of quoted organizations. The specific objectives of the study are to

1.      Ascertain the effect of Donations and Sponsorships on the Return on Asset of quoted organizations in Nigeria.

2.      Evaluate the effect of Donations and Sponsorships on the Return on Equity of quoted organizations in Nigeria

3.      Determine the effect of Donations and Sponsorships on the Earnings per share of quoted organizations in Nigeria

1.4  Research Questions

In order to achieve the set objectives, the following research questions guided the study

i.            How does Donations and Sponsorships influence the Return on Asset of quoted organizations in Nigeria

ii.             What is the impact of Donations and Sponsorships on the Return on Equity of quoted organizations in Nigeria

iii.            How does Donations and Sponsorships affect the Earnings per share of quoted organizations in Nigeria

1.5  Research Hypothesis

H01: Donations and Sponsorships do not have any significant effect on return on asset of   quoted organizations in Nigeria.

H02: There is no significant impact of Donations and Sponsorships on return on equity of  quoted organizations in Nigeria.

H03: Donations and Sponsorships do not have any significant effect on earnings per share of quoted organizations in Nigeria

1.6  Scope of the Study

The object of this study is to ascertain the impact of corporate social responsibility on the performance of quoted organizations in Nigeria. The study covers the nine (9) economic sectors in which organizations are listed on the Nigerian stock exchange. A total of fifteen (15) organizations were selected from the sectors covering a period of five (5) years from 2017 to 2021 for each organization. Data was collected on both corporate social responsibility and performance from the Annual reports of each of these 15 organizations.

1.7  Significance of the Study

Corporate Social Responsibility reporting assumes that the organization is socially conscious to discharge their social obligations for the wellbeing of the stakeholders and society in general. Hence this study will be relevant to the following groups of people:

1.                 Governments and its agencies will find the work very interesting as it will help strategize effective ways of regulating environmental, labor and social impacts of industry. Governments appear to be particularly interested in disclosure system that

may also be more cost effective, flexible, and decentralized, and that build on market mechanism and public participation.

2.                 Consumers: The study will benefit the consumers since they are among the public that have growing concern about the environmental and social impacts of the